Market Report: Second homes & holiday homes

It is clearly a trend during this year that the interest in second homes has increased - a positive sign and an encouraging economic outlook indeed.

Prospective buyers of second homes will certainly buy in an area that appeals to their family's hobbies and lifestyle, and also for the ideal holiday destination. This could be the bush, coast, mountains, golf estates, idyllic fishing area, and many more. To have your own holiday home is absolutely a splendid prospect for everyone with busy schedules to get together for a few weeks during the year, and also a golden opportunity to relax and unwind in familiar surrounds. A last-minute decision to get away to your own weekend home is possible in such a case and eliminates the hassle of looking for suitable accommodation.

Craig Hutchison, CEO Engel & Völkers Southern Africa says, 'If you have done your homework on the real values of properties in your area of choice, this could be a wonderful long-term asset for your family. However, be cautious about buying whilst on holiday, when your common sense and judgement can be clouded by the pure relaxation and the romantic influence that a vacation seems to bear. Clearly, if you are familiar with the area and have spent considerable time there to establish your desire to buy your holiday home, then you can enjoy the fruits of your judgment.'

A wise decision for this investment will invariably result in a profitable addition to your property portfolio.

The chances of a second home mortgage application to succeed, is less than 40%, unless submitted through a reputable mortgage originator, according to Betterbond Home Loans. Therefore, Craig advises second home bond applicants to use our highly experienced in-house Finance team. They have an enviable success rate in the industry and are leaders in their field. Contact EV Finance on 011 929 3096 or email info@evfinance.co.za for confidential advice and assistance.

Is an idyllic view ideal as an investment?

An additional advantage of a second home is that you could rent it out for those times of the year when you know you would not be utilising the property. Ideally though, one should use an independent rental agency to vet the calibre and integrity of the holiday tenant and to also manage the deposit and payment process.

You must give the security of your second home a high priority and undoubtedly employ the services of a reputable local security and response company. Unoccupied holiday homes are an easy and sought-after target for criminals.

Dullstroom is one of the many areas where the second home market has shown a definite and steady increase in interest from investors this year. According to our resident Engel & Völkers agent Charmane Horn, trout farms are very popular with Gautengers with a profile of buyers being in the 35 – 45 age group. Farms are sold in the region of R1,47 million to R14,5 million, however the majority of properties sold are under the R2 million mark.

According to Gert Vorster, KZN North Coast license partner, holiday homes on golf estates and other estates have shown a noticeable increase in the second half of 2014. He notes that virtually 95% of their buyers are South African, who seem to prefer the areas of Ballito (including Zimbali Coastal Resort and Seaward Estate), Shaka's Rock (including Simbithi) and Sheffield Beach. Prices vary from R1,3 million to R30 million with full title properties forming about 60% of the holiday home market.

The Engel & Völkers Hoedspruit office has noted a marked increase in second home enquiries and sales during the last few months, with most of their buyers coming from Johannesburg, Cape Town, Polokwane and Europe (with German and Dutch buyers in the lead). They have a variety of residential estates and wildlife estates for the leisure market where the profile of buyers are in the 36 – 49 age group. In some of the estates, the second home caters for the yet unsaturated rental market.

The benefits of having a second home

However, the share block option of ownership is most common with the national clientele where sales prices for a half share start from about R3 million upwards. Full title properties form about 80% of their second home market, with prices ranging from R950 000 up to R3,95 million.

According to a recent article in The Investment Week by Joan Muller, “Foreign buyers are back. Offshore investors looking for second homes in wealthy hot spots like Clifton and Plettenberg Bay are returning to SA after a virtual absence from 2009 to 2011.”

As Craig concluded, “With our wonderful South African climate and natural scenic beauty, it is not surprising that foreign buyers are once again streaming in. However we are very proud that so many South Africans are also once again re-entering the second home market.” Engel & Völkers' trained and qualified property sales advisors are well prepared to assist with all enquiries about your investment potential.